Inflation bridles stocks, leads to tightening of monetary policy

27.05.2021 - Evdokimov Roman
Inflation bridles stocks, leads to tightening of monetary policy

On Thursday, world stocks were pinned down while investors patiently waited for data coming from the United States that would hopefully explain inflation. Alongside this, more pressure are seen all over as the scaling back of central banks’ giant stimulus packages are in the cards.

European entities are caught in a losing trend with the Euro STOXX 600 losing 0.2%, German shares down by 0.5% and London’s main index experiencing slim losses. The only silver lining is France that had gained 0.1%.

While energy stocks had lost 0.2%, but was offset by its gains of 1.2% in the mining sector. Brtish bank HSBC on the other hand gained 0.1% after the resolution of moving its focus from U.S. retail banking and channel it to Asia.

Meanwhile, Wall Street sees losses in futures of around 0.2%.

The focus had been turned to U.S. gross domestic product and jobless claims, expecting numbers that could paint a clearer picture of the American economy. Investors all over had held back major bets prior to the monthly U.S. personal consumption report which will be filed on Friday.

Jeremy Gatto, the portfolio manager at Unigestion had this to say about the inflation:

“We still believe inflation will not be transient, but will persist – this is where I think we differ with central banks,”

A tightening of the monetary policy had been seen by many investors to be the apparent result of the rising inflation as resolved by the U.S. Federal Reserve. The strong suggestion of this resolution had offered support to the dollar which had been shorted recently.

The MSCI world equity was rendered flat. Earlier, MSCI’s broadest index of Asia-Pacific shares outside the Japan had seen losses yet again, thus trading flat at 695.37, not veering far from the Wednesday’s high of 696.76, a level that had been reached back in May 10th.

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